Budgeted sales of The Music Shop for the first six months of 2010 are as follows

Question

Budgeted sales of The Music Shop for the first six months of 2010 are as follows: Month Unit Sales Month Unit Sales January 150,000 April 200,000 February 180,000 May 190,000 March 210,000 June 220,000 Beginning inventory for 2010 is 60,000 units. The budgeted inventory at the end of a month is 40 percent of units to be sold the following month. Purchase price per unit is $7.
Prepare a purchases budget in units and dollars for each month, January through May.

The Music Shop Purchases Budget January - May, 2010

January
Purchase Units:
Purchase Dollars:

February
Purchase Units:
Purchase Dollars:

March
Purchase Units:
Purchase Dollars:

April
Purchase Units:
Purchase Dollars:

May
Purchase Units:
Purchase Dollars:

Explanation / Answer

January February March April May June Sales 150000 180000 210000 200000 190000 220000 Beginning Inventory 60000 72000 84000 80000 76000 88000 Ending Inventory 72000 84000 80000 76000 88000 (180000*40%) (210000*40%) (200000*40%0 Purchases 162000 192000 206000 196000 202000 ( Sales+Ending- Opening) Purchase Budget January February March April May Units Purchased 162000 192000 206000 196000 202000 Price per unit 7 7 7 7 7 Total in Dollars 1134000 1344000 1442000 1372000 1414000 (162000*7) (192000*7) (206000*7) (196000*7) (202000*7)

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